Reps panel fault NNPCL on move to borrow $2b in crude oil swap

The House of Representatives joint Committees on downstream and midstream petroleum resources has faulted the Nigerian National Petroleum Company Ltd (NNPCL) over purported moves to borrow additional $2 billion in crude oil-backed loans from international creditors to boost its financial inflow.

The Committee chaired by Ikenga Imo Ugochinyere explained that the decision maintained that the deal is uncalled for in view of the need to allow local refineries have adequate Crude Oil for their refining processes.

The Group Chief Executive Officer of the NNPC, Mele Kyari, reportedly stated that the national oil company is in discussions with international creditors to raise an oil-backed credit facility in order to pay international oil traders a backlog of $6 billion amid subsidy removal.

Ugochinyere however urged the NNPCL not to undermine the forensic investigation describing the said fresh loan as a major threat to President Tinubu efforts to ensure local refineries have Crude Oil for their refining processes.

He said the committee is already looking into the impact of past forward sales of crude , allegations of non remittance of any part of the revenue to the Federation account , unhealthy terms in the agreement and the effects of the deals on availability of crude for local refineries.

The committee in a statement warned that this move if allowed will further worsen the situation of of things, starve the refineries of feedstock, weaken revenue generation and create room for waste of future revenue.

“We want to bring to our notice today a shocking development and alleged move by the leadership of the Nigerian National Petroleum Company Limited (NNPCL) to mortgage once again our future crude oil assets and revenues for alleged mere administrative purposes .

“As the Chairmen of the joint investigative Committees on Petroleum Resources Midstream and Downstream it’s our duty to act in the best interest of the citizens and ensure that the downstream and midstream sectors are protected from any decision that will further worsen the problems currently bedeviling the sectors.

“This move if allowed will destroy things , starve the refineries, waste future revenue. We have ongoing investigation into past forward sales and allegation of non remittance to Federation account and non availability of crude to domestic refinery and now the citizens were excited on the recent news of president Tinubu intervention for crude supply to local refinery in naira and the committee has received intel of plans to mortgage future crude revenue and oil for another loan at a time the nation is struggling.

“This is preemptive of the committee work and the Committee wants to announce its halt of this fresh move and for the state oil company to briefly the parliament. The revenue been mortgage are sovereign wealth of the people and the parliament have a duty as the watch dog of the common wealth to step in.

“The NNPCL today is owned by FG and Nigerians hindered percent hence it’s actions must not hurt their shareholders who we lawmakers represent.

“We are calling on NNPCL to halt further plans borrow more loan with crude oil, as the move will sabotage the President’s deal for domestic crude supply. In August 2023, following the removal of fuel subsidy and the unification of the forex market which significantly weakened the naira, the federal government through the NNPCL secured a $3.3 billion loan from Afrexim bank to shore up liquidity in the market.

“Kyari had explained then that the loan would be used to shore up the foreign exchange reserve and provides a more urgent solution to the country’s FX challenges. The loan is said to be paid with crude oil set a $65 per barrel and had earmarked around 90,000 barrels of crude oil for the process.

“We are urging the NNPCL not to undermine the forensic investigation by the House of Representatives (the People’s Parliament) into crude oil supply with another fresh loan, as move is a threat to local refinery.

“On Monday, the Federal Executive Council (FEC) at its meeting presided over by President Bola Tinubu gave express approval of the sale of crude oil to indigenous refineries including the Dangote Refinery in Naira.

“The Chairman, Federal Inland Revenue Service (FIRS), Zach Adedeji said Tinubu had directed the NNPC to ensure it was done with immediate effect. Adedeji stressed that the memo by the president when implemented will promote the sale of crude oil within local refineries and NNPC to deal in local currency. So it’s surprising to us that despite the President’s directive, the NNPCL is borrowing again, instead of doing the needful.”